©2006 Prentice Hall ELC 310 Day 10. ©2006 Prentice Hall Agenda Questions? Assignment 3 posted Due October 17 @ beginning of class. Assignment 3.doc Quiz

©2006 Prentice Hall

ELC 310

Day 10


Agenda• Questions?• Assignment 3 posted

• Due October 17 @ beginning of class. • Assignment 3.doc

• Quiz 2 • Oct 21• 10 M/C (40 points) and 6 Essays (60 points) from Chap 6-10• Open book, open notes• 70 Min

• You should be working on your eMarketing Plans• Due Oct 28, Presentations on Oct 28

• Today we will be discussing Differentiation And Positioning Strategies (part of Tier 1)

• Next discussion is on Product, Price and Distribution (part of Tier 3) in Chaps 10, 11& 12

©2006 Prentice Hall 9-1

E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 9: Differentiation and Positioning Strategies


Differentiation is what you do to the product. Positioning is what you do to the customer’s mind.

It is the art of getting in and out of the mind-Jack Trout


Chapter 9 Objectives

• After reading Chapter 9 you will be able to:• Define differentiation and positioning and explain

why they are important elements of marketing strategy.

• Identify dimensions of differentiation and Internet-specific differentiation strategies.

• Discuss how companies can position or reposition themselves on the basis of attributes, technology, benefits, user category, relation to competitors, or integrator capabilities.


Segmentation

Targeting

Value

Differentiation

CRM/PRM

Positioning

Communication

Distribution

Offer

E-MarketingStrategy

Tier 2tasks

Tier 1tasks

Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers


The J. Peterman Story

• The J. Peterman Company is a classic example of successfully combining clever differentiation with powerful positioning.

• The founder established his company as a breed apart from ordinary competitors.

• Visit jpeterman.com and discuss what makes their products “unique.”

• http://jpeterman.com/product~cat~100204~sku~MBZ%204007.asp


• Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish the product from the competition.

• There are a number of differentiation dimensions and strategies for their accomplishment.

Differentiation


Differentiation Dimensions

• A firm can differentiate along 5 dimensions:1. Product

2. Services

3. Personnel

4. Channel

5. Image


Product Differentiation

• Product differentiation:• Includes customization and bundling, • Offers a combination of products/services that the individual

consumer needs + at attractive prices, • Supports one-to-one relationship building with each customer,

critical for a company’s long-term success.

• Product packaging:• Offline: packaging are design to appeal to consumers, be eye-

catching, compete with other products on store shelves, and sell the product.

• http://www2.dupont.com/Packaging/en_US/news_events/20th_dupont_packaging_awards_winners.html

• Online: consumers might require products with more utilitarian packaging + products will be shipped from the distributor directly to the consumer and thus never appear on retailers’ shelves.


Product Differentiation

Results:

Products don’t need the expensive, colorful packaging for store display.

Products only need a size and shape that is functional and useful for the consumer.

Packaging minimization will reduce waste and reduce packaging costs.

Lower prices, or more reinvestment in higher-quality, single-layer packaging enhancements.

Question?? For online what replaces packaging to “attract the customer’s eye”?


Service Differentiation

• Customer service:

• Ability to receive customer feedback through e-mail 24 hours a day, • Ability to respond more rapidly to customer concerns.

• The distribution of products ordered online:

• A way to differentiate services from traditional companies. • Shop at home groceries

• Online services, such as online banking and securities trading:

• Are becoming increasingly popular, • Are differentiated both by the features they offer and the service consumption

experiences. • Supplement traditional offline services, but replace the traditional offline services.• Value Add+ Services

• Portfolio management• Research


Channel Differentiation

• The Internet: • = a transaction & distribution channel + a

communication channel + a relationship channel, • Used to forge one-to-one relationships with individual

customers.

• The Internet expands:• Companies’ geographic range + business hours +

assortment of products available • The channel through which it can reach customers +

display a diversified assortment of offerings + differentiate itself.


Channel Differentiation

• There are multiple levels of online channel differentiation:

• Product or service information online = advantage over companies with no Web presence, Exploits the Internet as a communication channel.

• Commercial transactions online, Exploits the Internets as a transaction and distribution channel.

• The differentiation of competitors’ Internet-related service offerings.


Image Differentiation

• A company can differentiate itself by creating a unique experience online, called “experience branding.”

• The Internet’s interactivity allows companies to respond more quickly to customer requests.• Faster communication.• Retain current customers and attract new ones. • Be Careful not to create bad experiences


Differentiation Strategies

• Differentiation strategies are particularly important on the Internet.

• Internet marketing strategy revolves around company image and product information available on the Web.

• Specific strategies may include:1. Being the first to enter the market.

2. Owning a product attribute or quality in the mind of the consumer.


Differentiation Strategies, cont.3. Demonstrating product leadership.4. Utilizing an impressive company history or

heritage.5. Supporting and demonstrating the differentiating

idea.6. Communicating the difference.

• Amazon.com and Monster.com have successfully differentiated themselves.

• A strong brand image helps to attain “ownership” of a product. (Amazon.com),

• Customers are drawn to brands they trust, an attraction that is enhanced by a positive company history. Monster.com has essentially gained ownership of online job searches.

• Google.com owns the online search market, this becomes evident when the term “goggled it” became part of the American media vocabulary


• There are 6 differentiation strategies unique to online businesses.

1. Site Environment/Atmospherics • Easy downloads; easy navigation.

2. Making the Intangible Tangible• Virtual tours, 3-D images, trial downloads.

3. Build Trust• Strong brand recognition.• Privacy policy.

Internet-Specific Differentiation Strategies


Internet-Specific Differentiation Strategies, cont.

4. Efficient and Timely Order Processing• Deliver timeliness as an important benefit.

5. Pricing• In the early days of the Web, companies offered

discounts as purchase incentives.• Majority of firms today differentiate themselves in other

ways besides pricing.

6. Customer Relationship Management• Managing long term relationships with customers.


Internet-Specific Differentiation Strategies

1. Site Environment/ Atmospherics

(Watson et al. 2000)

2. Tangibilize the Intangible

(Watson et al. 2000)

3. Trust

Look and feel of site User friendly Accurate portrayal of

company and product

Images Virtual tours Realistic descriptions

Clearly state privacy policy

Use encryption for secure transactions

4. Efficiency and Timeliness

5. Pricing 6. CRM

Deliver what is promised to customers

Deliver in a timely manner

Be aware of competitor pricing

Potential customer savings

Customer tracking Seamless

communication Greater relationship

efficiency


Enhancing the Experience

• The E-Marketing Opportunity Model (Feeny, 2001) helps companies differentiate using e-marketing opportunities for enhancing:• The selling process.• The customer buying process.• The customer usage process.

• Online differentiation involves: • Creation of a distinctive customer experience.• Development of one-to-one relationships with

customers.


• Positioning is the process of creating a desired image among its competitors in the public’s mind.

• The e-marketer’s goals is to build a position on one or more bases that are relevant and important to the consumer.

Positioning


1. Product or service attribute.

2. High-tech image.

3. Benefits.

4. User categories.

5. Comparison with competitors.

6. Integrator position.

Bases and Strategies for Positioning


Product or Service Attribute

• May include features such as size, color, speed, etc.

• Amazon’s one-click check-out process is an example of a positioning attribute.

• Tylenol does not sell online, but provides useful one-to-one features for pain relief and health information.


Technology Positioning

• Shows that a firm is on the cutting edge of technology.

• At Lands’ End, consumers can build virtual models of themselves and try on virtual outfits.

• At American Airlines, customers can store seating preferences and frequent flier account information.

• Question? How long this type of positioning last?


Benefit Positioning

• Benefit positioning is generally a stronger basis for positioning, because it answers the consumer question: What will this do for me (the customer)?

• Miller Lite offers software that can be used as a social organizer.

• On the Valvoline motor oil site, visitors can send greeting cards, download racing screensavers and sign up for newsletters.


User Category

• User category positioning relies on customer segments.

• Kellogg’s has an interactive site for children.

• Yahoo! Geo Cities hosts pages organized by neighborhoods and specific interests.


Competitor Positioning

• Many firms position by benefits that provide advantages over their competitors.

• Companies may position themselves against • An entire industry.• A particular firm.• Relative industry position.

• “I Can’t Believe It’s Not Butter” margarine positions itself against other margarines.

• Avis: “We try harder”• http://www.avis.com/AvisWeb/html/wetryharder/

index.html


Integrator positioning

• We can expect to see more integrator positioning in the lending, jewelry and hospitality industries.

• Lending Tree helps brokers find clients more quickly and cheaply.

• Blue Nile sells an estimated $129 million of jewelry that would require 116 retail stores.

• Web travel agencies can move market share to hotels that give them discounts.


• Repositioning is the process of creating a new or modified brand, company or product position.

• A company may enhance or modify a position, based on market feedback, .

• Yahoo! repositioned from online guide to Web portal.

• Amazon repositioned from world’s largest bookstore to “Earth’s biggest selection.”

Repositioning Strategies

Documents

©2006 Prentice Hall ELC 310 Day 10. ©2006 Prentice Hall Agenda Questions? Assignment 3 posted Due October 17 @ beginning of class. Assignment 3.doc Quiz